MR. MCCURRY: Good afternoon, ladies and gentlemen.
Today's daily press briefing will begin with the President's
principal Health Care Policy Advisor, Chris Jennings, to tell
you more about the event soon upcoming.

Chris, come on up here, help us out.

MR. JENNINGS: Later this afternoon at I believe it's
1:45 p.m., the President is going to unveil a new FDA regulation
which will require pharmaceutical manufacturers for new and current
drugs to do both testing and labeling for medications that are
widely used by pediatric populations, or of course, children.

And this is something -- a regulation that the Department of
Health and Human Services and FDA have been working on for a good
time now. It follows in an effort by HHS to do this on a voluntary
level, on a voluntary basis. Unfortunately, over the last several
years we've noted that we've actually seen a decline in the amount
of testing and labeling done for children, despite the voluntary
efforts. So we have been working with the industry, pharmacists,
providers, and of course, consumer groups to develop a regulation
that the President will be unveiling.

This is just the unveiling of the reg. There will be a 90-day
comment period, and then we will go to final. We think it works to
complement legislation that is on the Hill, or it can complement
legislation on the Hill that also tries to deal with this initiative.
And the President will be with the Vice President, the First Lady,
and the Secretary of Health and Human Services, and the parent of
a child who has had great difficulty for herself and their
pediatrician to have adequate information on labeling.

So that's it. Any questions?

Q How much is this going to cost --

MR. JENNINGS: Well, it's unclear. The FDA assumes it's
about one percent of the current cost of drug development. It's
a very, very modest amount according to them. I think the industry
may say it's more. We will certainly be getting comments during
the upcoming period, but we do anticipate it being very, very modest
because, one, it does not necessarily require clinical studies.
They can do pharmakenetic studies, which means they don't necessarily
have to have populations of children in order to get the type of
information that's necessary. Also, there has been some information
for current drugs that are already out there that drug companies can
access to get the type of information necessary and required under
this legislation.

Q Does it apply to all medicines?

MR. JENNINGS: It applies to all prescriptions that will be
used widely by children or are meaningful to children. We anticipate
for new drugs that's about 12 to 14 new drugs a year and current
drugs, too. And the regulation itself it will mention a category of
about 10 drugs that are currently on the market that have inadequate
testing.

Q Did the drug companies fight this?

MR. JENNINGS: Well, the drug industry has indicated today
and last night that they look forward to working with us in a
collaborative effort. I think that they are not overly thrilled
about the concept of it being required or mandated. We would only
point out that in the last five years we've actually seen a decline
in necessary testing and that we see no other way to address the
problem. I anticipate that over the next 90 days we'll have even
more serious discussions with them. And I hope by the end of the
day they will be supportive of other regulation by the time it goes
final.

Q Did you say you identified just 10 drugs that are
currently on the market that need --

MR. JENNINGS: The regulation itself lists 10 categories of
drugs ranging from asthma to antibiotics to pediatric AIDS and
particularly these protease inhibitors that are being used in a
significant way. There may well be others but we will go ahead
and review. Of course, many of these drugs have been on the market
for so long that some information has become available, and
pediatricians feel that they have the information they need and
getting the adequate clarifications will not be difficult.

Q So is this a problem -- are kids being over-medicated?

MR. JENNINGS: I think that you'll see that the major problem
is that there are three categories -- what happens is really three
choices for a physicians. One, because they don't have the
information they need, they don't prescribe medications that
children may benefit from, which obviously is an unfortunate outcome.
Secondly, and what I would anticipate happens most frequently, is
they guess. Frequently, they guess right. They've had lots of
experience. Physicians know -- have a good sense of their patients
and their needs. And third, they guess wrong. They either
under-medicate or over-medicate, sometimes with tragic consequences.
There have been some cases of deaths that have been reported because
of the lack of information. That's why the American Academy of
Pediatricians and many other physicians throughout the country,
the Family Physicians, the College of Physicians, strongly, strongly
endorse this information being made to them -- and this regulation.

Q Chris, are there any liability concerns? Are the companies
concerned that if they say that this drug might be all right to use
on children under 18 or under 12 and it turns out that it isn't,
then all of a sudden they've got a problem.

MR. JENNINGS: They actually raised liability concerns during
the vaccine compensation debate several years ago, then they dropped
that as a major concern of them. We have no indication or no evidence
whatsoever that information on such testing has created any liability
concerns. We've asked in the past for specific examples. They have
given us none. I don't anticipate that being a very significant
concern. We will talk to them about that the during the comment
period, but, again, I do not think that is a serious concern.

Q How many children take these medications?

MR. JENNINGS: Millions. Certainly we're talking about
everything from asthmatics -- children with asthma, to children who
have AIDS, to every known disease that children access. So we're
talking about probably anywhere between millions to even more than
10 million children.

Q Why aren't drug companies are already doing something
that sounds like it makes so much sense?

MR. JENNINGS: Well, I think that they would say that they
have some -- I don't know exactly what they would say. I think you
should ask them. My personal belief is that they think that a lot
of the information they have obtained for adults is somewhat adequate,
that it's not necessary to impose additional costs on the industry,
and that they've raised concerns. They would also argue that they're
doing better, notwithstanding some of the data to the contrary.

Q If I could switch that question just a little bit, why is
it that the FDA hasn't done this before?

MR. JENNINGS: Well, the FDA, and before Dr. Kessler left,
he worked very hard on this regulation. He consulted with the
industry for a number of years. They asked for us to go voluntary
compliance and to come up with some incentives for them to do it on
a voluntary basis. We did that. We released a reg in 1994. It
clearly has not had the desired effect, and so we're going beyond
that today.

Q You mentioned prescription drugs, but how does this apply
to over-the-counter medications?

MR. JENNINGS: Well, this is for prescription drugs that
doctors prescribe frequently. A lot of over-the-counter drugs do
have pediatric labeling information, but that's something that I
will tell you I have not looked into or is not part of this
regulation today.

Q Secretary Shalala yesterday was indicating that so many
OTC medications just simply say, ask your doctor, and that she
indicated that this may move to clear that up.

MR. JENNINGS: Well, this is for prescription drugs, and,
certainly, if there is a major concern on OTC level, we will be
consulting with the FDA about that.

Q You mentioned protease inhibitors. What is the problem
there with the drug companies -- they are not adequately providing
information to patients, or doctors, or who?

MR. JENNINGS: Well, as you may know the protease inhibitors
are some of the most difficult to use medications and to prescribe.
They are very complicated. They deal with regimens of prescriptions.
They are usually and sometimes called drug cocktails. They have
very, very differential impacts on children. There have been drug
companies, and I'm sorry there was one Angoram or a smaller drug
company that did do pediatric studies much to the praise of the AIDS
community and others recently, but many other companies have not.
This is very, very significant and absolutely essential information
for any pediatrician for treating a child who has AIDS.

Q Chris, does this mean that a lot of parents will be asking
to have their children tested?

MR. JENNINGS: No, not necessarily, because a lot of this
testing can be done on information currently available.
Pharma-kinetic testing, which does not require that I have actual
children doing testing. It's based on computer simulations of
differential metabolism rates of patients. So we don't anticipate
it to be a major population although there will be some of that
testing. And, obviously, all of that testing is done on a voluntary
basis in trials throughout the country.

Q Do you expect that the industry will try to block
the regulation?

MR. JENNINGS: We would be very disappointed if they blocked
this regulation. We would fight very, very hard, and I doubt that
they would want to do that this year in this Congress. But I think
you better ask them. But my general sense after conversations
with the pharmaceutical manufacturers association last evening was
that their desire was to work with the administration on this
regulation in a collaborative, constructive way. We anticipate that
they will live up to that commitment.

Q You mentioned categories of drugs. In what categories of
drugs do you see most of the over-prescribing or the guessing by
physicians that --

MR. JENNINGS: You know, I think that that's a question
better answered by some of the physicians groups who will be here
later this afternoon, so -- I'm not a doctor and I wouldn't want
to guess some specific data in that area.

Q Chris, Mike indicated we could run a couple other
health-related questions by you today.

MR. JENNINGS: It would be my pleasure. Thank you, Mike.

Q On the Medicaid situation with New York, there are
some accounts saying you're trying to get together with New York
legislators to fashion another solution. Is it accurate to say
you're backtracking on this, or what are you trying to do exactly?

MR. JENNINGS: No, I welcome the question. I think we need to
backtrack a little bit about this whole issue, just for one moment.
We have worked very hard with the New York delegations, with the
committees of jurisdiction, with Senator Moynihan, Senator D'Amato,
with other members in trying to fashion a way to assist some of the
problems New York is facing with their provider tax situation.

We explicitly raised concerns and objections -- very, very
serious objections to the way the Senate Finance Committee passed
a broad-based waiver approach to New York only on the provider tax
issue. We made that very clear in a letter from Frank Raines and
in subsequent conversations from myself and other representatives
of the administration to members and staff on the Hill.

In an effort to try to work out a compromise, we worked
very closely with the Secretary's office and Bruce Vladeck's at
the Health Care Finance Administration to see if we could look
at a compromise approach to dealing with legitimate concerns that
New York had raised about provider tax issues. We gave them some
specific alternative language that would have addressed about half
their problem. The New York delegation -- the committees of
jurisdiction were given that language. They said they needed to
run it by folks. It was rejected.

We explicitly said we still had major concerns to that.
No one ever reached any agreement on what was agreed to by the
Senate Finance Committee by any representative of the
administration. And we continue to have objections to that process.

One last point that I think I've got to make is that there are
at least 14 other states who have provider taxes in this country who
were not given any type of waiver protections as was outlined in the
New York provision. Had we gone to doing New York it would have been
a classic Washington-based rifle shot provision for one state and one
state only. And it would have been impossible for us to say no on
provider taxes that we believed to be impermissible under current
law and statute.

As to your original question as to when we are going to meet
with them or will we meet with the New York delegation, we have
ongoing strong relationships with New York. I think that's best
exemplified by the New York waiver negotiations that were completed
about a month or two ago. It was widely praised by the Governor,
by the New York delegation, by the Mayor, by representatives of Labor.
We have a very good track record in working out problems with New York
that are legitimate in nature. We will do the same as it relates to
the provider tax issue. We will be more than happy to meet with them
in the upcoming weeks. It will be done in a way that is consistent
with our ongoing negotiations with every state. And it will be done
by the Department of Health and Human Services.

We will be happy to help facilitate that but those are
conversations that have to be done by HCFA, HHS and the state of
New York in consultation with OMB and the Domestic Policy Councils.

Q So when Mr. Raines said that this question had not been
raised at his level, he was mistaken?

MR. JENNINGS: No, he -- in the meetings with the members,
when they were talking about children's health, Medicare, Medicaid,
education, welfare, taxes and all the other multitude of issues that
were raised at that level, an issue with regard to one state's labor
provisions did not get raised to that level. Mr. Raines did send up
a letter outlining all of our concerns with Senate provisions,
including the New York problem. We, as the administration, are on
record opposing the approach the Finance Committee took. But it
was not raised at that level, but it was raised directly to -- by me
and many other representatives of the administration to the committees
of jurisdiction. And we went the extra mile in a good-faith effort
to try to address concerns that would not have had a special impact
on any other state, would have only dealt with a New York issue that
is unique to New York, which is this regional tax issue.

Q When you said that you had discussed language that
would have addressed about half of New York's problem, do you mean
financially -- in other words, it would have helped them recoup about
half of the $317 million that they would have gotten out of this over
five years?

MR. JENNINGS: Whatever the estimate of the number is, we think
it's about half dollar-wise.

Q So you think you can come up with a solution that's
legally defensible that will get them back half?

MR. JENNINGS: We made a proposal that moved in that area on
the legislative front. The question now remains whether we can do
it on a regulatory-administrative front ourselves without legislative
action. We think that there might be possibilities. We will be
deferring to conversations with HHS on that matter.

Q The Republicans say that in the final negotiations any
serious issue was kicked up to the top level, and so the fact that
you never kicked this up to the top level gave them every reason to
believe it was not a major obstacle or in any way veto bait. Given
that other issues were kicked up to the top level, didn't they have
a legitimate basis for concluding that you had decided to give on
this since you didn't kick it up to the top?

MR. JENNINGS: Well, I honestly do not believe that that's
the case. There are hundreds and thousands of provisions in this
legislation; not every single provision could be kicked up to the top.
Members of this budget committee, of our working group and on the
Hill, were working around the clock on major, major issues that had
profound effects on the whole country. This was an issue that was
related specifically to New York. Clearly, it was a major concern to
us. The President, subsequent to the agreement, asked us to go
through the balanced budget agreement to see if there were any
provisions that met his criteria for potential line item provisions.
New York, by definition, made those criteria and was the reason why
we went to the action of line item.

Q If I could just push that one more time. Given that this
is the only spending issue that was vetoed, doesn't it seem logical,
if it was so serious a concern that it would ultimately be vetoed,
that it should have been kicked up to the top? And again, doesn't
their argument that you never signaled that it was this important
seem to have some basis?

MR. JENNINGS: Well, we had many issues that could have
been potential veto items throughout this negotiating process that
there were specific discussions, and we worked them out to a
compromise -- in some ways that we would have preferred not to have
been the case. There are a number of Medicare provisions, Medicare
savings, MSA, the private fee for service option, et cetera, are
things that we had to negotiate out, things that we didn't
particularly like a great deal, but we had to go for.

There are going to be examples of provisions in any budget
reconciliation legislation, I would suspect, that include hundreds,
if not thousands, of provisions that may not meet the criteria of
a presidential discussion that still do not meet the criteria of an
acceptable provision. And this was just one of those.

Q Just to make sure I understand you correctly, are you
saying now the administration is considering a regulatory compromise
that will give New York roughly half of what it would have gotten
under the bill?

MR. JENNINGS: What I'm saying is, we had a specific
legislative authority to move into that direction and what we are
trying to do is to evaluate if we have the authority to move in
that direction on an executive-administrative approach.

Q You said there were about 14 other states that have
this same problem with provider taxes. Did you offer them a
similar -- have you been offering them similar sort of compromise?

MR. JENNINGS: That's a very good question. On the regional
tax issue that we have offered, or we've tried to offer to New York,
as far as I'm aware of there is no other state that has a similar
concern. What New York has is a whole bunch of other issues related
to other provider tax issues that are very similar to other states.
But on the issue of regional tax, it is a small provision that has
a significant impact on New York and New York only that does not have
ramifications to a broader population of states.

Q Where do you stand in your discussions with those other
states? I mean, all those states with provider taxes that are
deemed unacceptable, inappropriate, or illegal --

MR. JENNINGS: Right.

Q So where are you on the status of those?

MR. JENNINGS: We've already indicated to many of them that
we do have concerns. We are going to have further discussions
with them in the very near future.

Q New York was the only one that's being offered a
compromise --

MR. JENNINGS: New York has one provision that is not
applicable in any other part of the country, and that's something
that we're willing to look at because we think it may be consistent
with the original intent with the law that was passed in 1991.

MR. MCCURRY: Two last questions, here and here.

Q I've been told that New York has been applying for
this waiver from HCFA since 1991. Why hasn't HCFA ruled on
this previously?

MR. JENNINGS: Well, there was a question of whether we had
the legal authority under the statute to be able to do that, and
also to determine what kind of impact it would have on all other
states. There are many other states who have waiver requests into
the administration on these provider taxes. We are currently
undergoing an intense review of all of those states and we will be
doing -- you will be, I'm sure, hearing more of that as time goes on.

Q We understand the President has on his desk for action
today a law that would create a postage stamp to support breast
cancer research. If the President plans on signing this, we
understand the administration had raised objections to it -- that
you didn't like the way it allocated funds. Have those objections
been overcome, or have you just decided as a political matter to go
ahead and sign it? And are you concerned that this could result in
sort of the disease of the week type legislation?

MR. JENNINGS: Well, we have raised some concerns about this.
We think on balance it builds on a lot of the efforts that the
administration has had. We've had a significant increase in breast
cancer research dollars that the President has personally been very,
very support of. The First Lady and others and Secretary Shalala
has had great interest in pursuing this. We think this is just one
more way to get additional resources.

The one thing that we are concerned about and will still
guard against is to make sure that these dollars are not used to
replace current allocation resources -- in other words, those
dollars are used -- they will not supplant they will supplement
what we already have in the system. And that was a question we've
always had about this approach. We're going to make sure that we
do everything possible working through Treasury and HHS to make
sure that it happens.

Q What about other diseases? People may come and want an
AIDS stamp or a leukemia stamp -- are you prepared to go along with
those proposals?

MR. JENNINGS: I think that's a legitimate question that
we're going to have to evaluate and, again, we did not make the
proposal ourselves. I think that there is -- you know, people can
raise concerns about that approach. But, again, on balance, we
think that this is more than acceptable and that we're going to do
everything that we can to address our concerns.

Q And the President will approve it today?

MR. MCCURRY: I expect him to sign it today.

Q Can I just ask one question about the President's event.
First of all, $13 to 20 million is the number that has been bandied
about about what this would cost drug companies. Is that about right?

MR. JENNINGS: That is a number that is included in the current
reg that is being made public today. It is an FDA estimate. I assume
that the industry will raise questions about that estimate. And,
again, this is a reg that is being released today. There are 90
days of comments and before it goes final, we review all that data
before we make a final determination of the exact cost impact of
these regulations.

Q And there are 10 drugs right now currently that
will be affected?

MR. JENNINGS: There are 10 that are listed explicitly in the
reg. That does not mean that that covers the whole panoply of drugs
that would necessarily come under the jurisdiction.

Q Can you give an estimate for that, for that whole
gamut -- 10s, 100s, 1,000s?

MR. JENNINGS: There are about, I would say, on a yearly
basis we're talking about roughly 15 or so drugs a year that will
have to come under this because we're estimating about -- I'd say
12 to 15, maybe more.

Q Those are new ones. I was talking about the existing ones.

MR. JENNINGS: The new drugs -- I mean, the existing drugs,
there is at least 10; there may be more. And we're going to have
to see how frequently -- how rapidly FDA can get that information
out to pediatricians and the families who need this information.

Q Do you know those 10 off the top of your head?

MR. JENNINGS: It's in the regulation and I can tell you that
asthma drugs are one of them. But if you'd like to afterwards, I can
get you a list.

Q At the President's news conference last week, he said that
the administration would be addressing the issue of health care
quality for nursing homes and I think possibly home care shortly.
Can you expand on that at all?

MR. JENNINGS: Not in this context. No, I think he's, the
President has a long -- from the days he was even an Attorney General
in the state of Arkansas, he had major concerns about quality issues
with the nursing homes and also has a great interest in seeing if
there are ways that we can look at alternatives to institutionalized
care because he thinks that there are cost-effective approaches.

In so doing, though, he also wants to make sure that we
address what he considers to be unacceptable situations as it
relates to allegations of and real fraud and abuse in home care.
And so he wants to -- he will be, I assume, in fairly short order,
Looking at potential actions to address both issues coming from
different angles.